Fast food and coffee just a few bitcoins away

Mahesh Sharma

From little things, bit things grow - rapidly. Melbourne-based web developer Tim Mansell acquired his first bitcoins - a form of digital currency - as an investment early last year when the price started skyrocketing. Now the novelty has worn off, but he's found he can use the currency to pay for his everyday expenses, including something as simple as buying a sandwich.

Melbourne shop, Hero Subs, was one of the first food franchises in the world to accept bitcoin. Now, the city has the country's most bitcoin-enabled businesses, according to a global digital currency map that updates numbers every hour. There are at least 52 Melbourne shops and 28 Sydney businesses accepting the virtual currency, and the lesser known "litecoin."

Bitcoin bypasses banks and financial institutions by allowing individuals to pay each other and online merchants with coins held in a digital wallet. Transferred using mobile and web apps, its popularity has grown from being an efficient way to pay for goods online to being used in mainstream bricks-and-mortar shops.

Mr Mansell, 31, said: ''I spend just to support the economy because if no one spends their coins and everyone hoards them then it's not going to survive or flourish.''

While cheap as bits when the system was first developed five years ago, bitcoins were worth about $US580 ($614) per unit at time of writing, down from a peak of $US1120 ($1186) in November.

Instead of taking cash, proprietors of cafes and other businesses allow customers to buy coffees, sandwiches and other items by transfering bitcoins from their wallets to the shop's using a dedicated point-of-sale app on a tablet. And even though the bitcoin price of a coffee is .0005649 bitcoin, it seems to be adding up.

Advertisement

Hugh McIntyre, owner of The Little Mule Cafe in Melbourne's CBD, said he had accrued several bitcoins since he started accepting the digital currency in January. Transactions were initially slow but had risen to about 25 a week, with the average purchase equivalent to the price of two coffees. He is holding on to his bitcoins in the hope it will pay huge dividends.

''It's a bit of a novelty,'' Mr McIntyre said. ''It's just an interesting experiment to see how it will go, and whether it does blow up.''

Sydney publican Garry Pasfield has been accepting bitcoin at The Old Fitzroy Hotel since last September, and has four bitcoins in his wallet. Bitcoins sales represent about 1 per cent of his revenue. About half the transactions are converted to Australian dollars within 24 hours, while he saves the rest as bitcoin.

"Almost every bitcoin sale is new business," Mr Pasfield said. "Last monday night we had an American couple here and they ended up using bitcoin to pay their $150 bill."

It's so embedded in the business the tills feature a button labelled "bitcoin trade".

"People seek us out because we're one of the few people that accept it permanently."

It's a similar story for Simon Hawkins, owner of St Kilda's cafe imbiss25, which started accepting bitcoin when it opened in October. At the currency's peak Mr Hawkins' business was processing about 10 bitcoin transactions a day. He sold a few bitcoins at the time - for ''a little bit of a thrill of speculation'' - but said his strategy was to keep his digital wealth as a ''rainy day fund''.

''It'll be a dream if one day we could pay our coffee suppliers in bitcoin,'' Mr Hawkins said. ''I've mentioned it to them as they buy coffee beans from overseas, and it could save them a fortune in currency exchange, but obviously the farmers have to accept bitcoin, which could be a while off.''

At first, Mr Hawkins was manually processing the bitcoin transactions. He used his personal bitcoin wallet to generate a QR-code. This QR code would then be scanned by the customer. Mr Hawkins would have to manually calculate the conversion rate for bitcoins to Australian dollars.

Finally the customers had to transfer this amount via the bitcoin payment app on their phones. It was very time-consuming and finicky, he said. however, on January 8 In January, he they switched to a web-based app developed by Melbourne start-up DC POS, as part of a pilot project featuring 15 Melbourne businesses.

DC POS managing director Mike Nelson said the system processed $851 in 81 transactions one day last month. In the past six months the number and value of transactions had risen by about 30 per cent.

Globally, DC POS says it has about 100 customers who have generated the equivalent of $10,000 in sales. He said it typically charged a 1 per cent fee to exchange the bitcoin to Australian dollars.

Sam Tate, marketing lead at Melbourne-based bitcoin wallet developer CoinJar, said he bought his coffee at The Little Mule Cafe using bitcoins. He said the barriers to entry for trading in bitcoin were, in some ways, lower than what was required for cash.

''Traditionally, you need to set up a bank account, which requires all sorts of identification, but you don't think about it because you do it as a kid,'' said Mr Tate, who received his first bitcoins as payment for a contracting job.

''With bitcoin, you just need your phone, a QR-code and you can transfer value like you would with cash. Because it's digital, it makes sense in our tech-driven globalised society.''